Debabrata Banerjee, Kolkata V. DCIT,Cir-34,Kolkata., Kolkata

ITA 1084/KOL/2023

• Counselvise Citation: [2024] 101 COUNSELVISE.COM (IT) 6474 (ITAT-KOLKATA)
• Duration Of Justice: 8 month(s) 8 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2024
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 12-12-2023
• Assessment Year: misc
• Appeal Filed On: 09-10-2023
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Reopening of assessment; Reason to believe
• Section: 147; 148; 144; 143(3); 142(1); 133(6); 143(2); 69A; 13; 153

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “A” BENCH, KOLKATA [Before Shri Rajesh Kumar, AM& Shri Pradip Kumar Choubey, JM] I.T.A. No. 1084/Kol/2023 Assessment Year: 2013-14 Debabrata Banerjee L/R of Ajit Kumar Banerjee (since deceased) 135, Biplabi Rash Behari Bose Road, Kolkata-700001. (PAN: ADUPB3855F) Vs. DCIT, Circle-34, Kolkata. Appellant Respondent Date of conclusion of Hearing 27.05.2024 Date of Pronouncement 18.06.2024 For the Assessee Shri A. K. Tibrewal, AR For the Respondent Shri Subhendu Datta, CIT, DR ORDER Per Shri Rajesh Kumar, AM This appeal filed by the assessee is against the order of Ld. CIT(A), National Faceless Appeal Centre (NFAC), Delhi dated 11.09.2023 for AY 2013-14. 2. The issue raised in ground no. 1 is not pressed at the time of hearing, therefore, the same is dismissed as not pressed. 3. The issue raised in ground no. 2 is against the order of Ld. CIT(A) upholding the assessment framed u/s. 147 read with section 144 read with section 144B of the Income-tax Act, 1961 (hereinafter referred to as the “Act”) in the name of “Ajit Kumar Banerjee”, a deceased person in pursuance to the notice u/s. 148 of the Act issued in the name of the same deceased person which is without jurisdiction, illegal and void ab initio. 4. Facts in brief are that the assessee filed the return of income on 31.03.2014 declaring total income of Rs.1,66,75,900/-. The case of the assessee was selected for scrutiny and assessment was framed u/s. 143(3) of the Act vide order dated 10.03.2016 by making an addition of Rs.84,40,786/- by the AO by estimating profit @ 18% of the turnover and making therefrom the deduction of profit already declared by the assessee thereby assessing the total income at Rs.2,51,16,686/-. The said assessment order was subjected to appeal before the Ld. CIT(A). In the meantime, the AO received information from DDIT/ADIT, Unit-5, Kolkata that Siliguri/Jalpaiguri Development Authority took up the construction of 2 ITA No. 1084/Kol/2023 Debabrata Banerjee, AY 2013-14 the electric crematorium at Bagdogra and granted work order on various dates to M/s. Eureka Trader Bureau with Proprietor Sri Ajit Kumar Banerjee of 135, Biplabi Rash Behari Bose Road, Kolkata. It was further reported that though the Executive Engineer had certified the supply, delivery, installation, testing and commission of the supplied items for electric crematorium at Bagdogra. However, on inspection conducted by the SJDA authorities at the sites of the proposed electric crematorium, it was detected that neither the materials except work order no. 601/elect/Engg. has been supplied at both the respective sites nor been kept at the departmental TEA park Warehouse Near NJP. The assessee has received a sum of Rs.52,10,74,000/- against these work orders from the SJDA on various dates during the FY 2012-13 and it was reported that against such payments no goods were supplied or services were rendered by the assessee. When the assessee was confronted with these facts, he stated that payments were made to the proprietary concern only after the material supplied/services rendered by the said firm. However, he could not provide any documentary evidences viz. e-bill, transportation papers, loading and unloading details etc. to prove that the materials were actually delivered or supplied. Accordingly, notice u/.s. 148 of the Act was issued to the assessee which was neither complied with by the assessee by filing any return of income nor any reply was submitted. Finally, the assessment was completed by treating the entire money received of Rs.52,10,74,000/- as unexplained money thereby assessing the total income at Rs.53,77,49,900/- vide order dated 25.03.2022 passed u/s. 147 read with section 144 read with section 144B of the Act. In the appellate proceedings, Ld. CIT(A) confirmed the said order by passing a very vague order which is extracted as under: “DECISION OF THE APPELLATE AUTHROTIY The both side contentions of the Assessing officer and the Appellant Assessee has been carefully considered and this Appellate Authority has noted following points: i. The Appellant Assessee filed its return of income for A Y 2013-14 on 31.03.2014 declaring total income of Rs 1,66,75,900/-, then the return was processed u/s 143(3) on 19.08.2014. ii. It was reported that Executive engineer has certified the supply, delivery, installation, testing and commission of supplied items for electric crematorium at Bagdora. iii. However, on inspection conducted by the SJDA authorities at the sites of the proposed electric crematorium at Malbazar and Minaguri, it was detected that neither the materials, except work order no 601/elect/Engg, has been supplied at both the respective sites nor been 3 ITA No. 1084/Kol/2023 Debabrata Banerjee, AY 2013-14 kept at the departmental TEA PARK Warehouse, Near NJP (Which was used as god own for all supplied materials for different SJDA Projects.) iv, The Appellant Assessee has received an amount of Rs 52,10,74,000/- against these work orders from the SJDA on various dates during FY 2012-13. But as per the inspection conducted by the SJDA authorities at the sites, no materials except work order no 601/elect/Engg has been supplied on the sites nor been kept at the godown of SJDA. v. Appellate Assessee does not provided any documentary evidences like: E-bill, Transportation papers, loading and unloading details etc. to prove that the materials were actually delivered or supplied. vi. As appellant Assessee was not able to provide any submission or any documentary evidences in support of its proceedings" due to that the Ld AO had a reason to believe that the income has escaped assessment. Accordingly Ld AO sent a notice u/s 148 which was duly served upon on the assessee. In response of the above notice and questionnaire, Appellant Assessee neither filed its return of income nor filled its reply. Appellant Assessee has also not filled audit report for the A Y 2013-14. vii. As the Assessing Officer was not able to provide information and documentary evidences about the work orders, the amount of Rs.52,10,74,000/- was treated unexplained and was added back to the income of the assessee by the Assessing Officer. viii. Appellant Assessee in its submissions dated 04.09.2023 has provided Assessment Order copy of Appellant Assessee own case for A Y 2013-14 u/s 143(3), Order of CIT(A) for assessee own case u/s 143(3). ix. Appellant Assessee in his whole submission has stated that in the previous Assessment Proceedings u/s 143(3) which were going on for the AY 2013-14 in assessee's own case. x. It is also stated that vide letter dated 14th Jan 2016, Appellant Assessee filled various details and documents which inter alai included the details of advances of Rs 58,25,96,154/-, this submission dated 14th Jan 2016 was provided to the Ld AO In the Assessment Proceedings u/s 143(3) for the AY 2013-14, but this appeal if against the order dated 25.03.2022 u/s 147 r.w.s 144 r.w.s 144B, which is different from the proceedings u/s 143(3). xi. For this case Appellant Assessee has not provided any documents, bills, transportation details etc. xii. Appellant Assessee in its submissions in Para 3 on page 13 states" Without prejudice, in this case the Notice u/s 148 has been issued by Ld. DCIT, Circle 34, Kolkata on 31st March 2021 in the name of Anil Kumar Banerjee PAN: ADUPB3855F. The said Notice was uploaded In the ITBA System, but the physical copy thereof was not served on the assessee's legal heirs. The email address recorded in the ITBA portal was the email address of the deceased assessee. The same is not used by the Legal representatives of the assessee and therefore the Impugned Notice as well as all other notices under section 142(1) and/or Show Cause Notice issued, by Ld. DCIT and/or by National Faceless Assessment Centre did not come to the notice of the Legal Representatives of the assessee. The reasons recorded by Ld. DCIT Circle 34, Kolkata for reopening the assessment of the deceased assessee was never communicated to the assessee. Appellant Assessee accepts the fact that the notice u/s 148 was issued to the assessee and uploaded on the ITBA portal and also served through Mail, hence whether the physical 4 ITA No. 1084/Kol/2023 Debabrata Banerjee, AY 2013-14 notice was served or not if the notice is served through Mail, it is considered as valid. So this claim of Appellant Assessee regarding notice u/s 148 is null and void is baseless. As per the submissions dated 04.09.2023 provided by the Appellant Assessee, in the submissions Appellant Assessee has nowhere mentioned about the income which is added by the Assessing Officer on account of unexplained income uls 69A amounting to Rs.52,10,74,000/-. The appellate Assessee has also not provided any information or documentary evidences to the Assessing Officer as well as to this Appellate Authority. In view of the above facts and discussion, this Appellate Authority finds that the Appellant Assessee is not willing to co-operate with this Appellate Authority, as Appellant Assessee is not providing any information or any documentary evidences regarding the sum received by the Assessee from SJDA against the work orders amounting to Rs.52,10,74,000/-. So, this Appellate Authority puts its weight on the order of the Assessing Officer as the Appellant Assessee failed to provide the information and documents, the appeal of the Appellant Assessee is hereby dismissed and the Order of the Assessing Officer amounting to Rs. 52,01,74,000/- regarding unexplained income u/s 69A of Income Tax Act 1961 is upheld.” 5. The Ld. AR vehemently submitted before us that the assessment framed by the AO is invalid, void ab initio and non est in the eyes of law for various reasons. Arguing on the first limb of his argument, the Ld. AR submitted that the notice u/s. 143(2) of the Act was issued by the AO i.e. ITO, Ward-34(2), Kolkata and Shri H. K. Ghosh, Ld. AR of the assessee appeared on 14.10.2014 and 18.12.2014 and furnished the copies of various contracts and other details and evidences in relation to such contract on the information called for by the AO. Thereafter, the Ld. AR stated that the assessment was framed by the Ld. DCIT, Circle-34, Kolkata. The Ld. AR, therefore, prayed that the assessment so framed by the Ld. DCIT was without issuing notice u/s. 143(2) of the Act was bad in law and, therefore, all the subsequent proceedings are also invalid and bad in law. The Ld. AR, therefore, prayed that the reopening of the assessment is also bad in law, invalid in the eyes of law and should be quashed. Arguing on the second limb of his argument, the Ld. AR stated that the reasons recorded u/s. 148 of the Act, a copy of which is available at page 1 of the Paper Book, wherein nowhere states that there has been failure on the part of the assessee to disclose information materially and truly in the original assessment proceeding and that failure has led to escapement of income. The Ld. AR stated that the notice u/s. 148 was issued on 31.03.2024 which is apparently more than four years after the end of relevant assessment year which is AY 2013-14. The Ld. AR argued that the reopening of assessment can only be made subject satisfaction of condition as envisaged in 1 st proviso to section 147 of the Act which states that where assessment has been framed u/s. 143(3) of the 5 ITA No. 1084/Kol/2023 Debabrata Banerjee, AY 2013-14 Act then the reopening can only be made beyond four years from the end of relevant assessment year if the escapement has been occurred due to the failure on the part of the assessee to disclose the information fully and truly during the assessment proceeding and not otherwise. No mention by the AO that assessment was framed u/s. 143(3) of the Act. In the instant case, the Ld. AR contended that the AO has no where stated any failure in the reasons recorded to be attributable to the assessee which has led to the escapement of income and in defense of his argument, Ld. AR relied on the decision of Apex Court in the case of ACIT Vs. CEAT Ltd. [2022] 449 ITR 171. The Ld. AR, therefore, prayed that in view of the said decision, reopening of assessment after a period of four years is invalid and on this count also the assessment framed may be quashed. On the last limb of his argument, the Ld. AR contended that the assessee has expired on 19.12.2019. 6. The Ld. AR while arguing on the third limb of his argument submitted that the notice has been issued u/s. 148 of the Act, at page no. 4 of the paper book, in the name of dead person by mentioning his PAN though it has been stated in the notice that the notice is through legal heirs. The Ld. AR stated that the assessee passed away on 19.12.2019 and death certificate is attached at page no. 5 of the paper book. The Ld. AR therefore, prayed that since the assessment has been framed in the name of a dead person by mentioning his PAN, therefore, the assessment so framed is invalid and non-est in the eyes of law as the said notice would have been issued in the name of legal heirs and not by mentioning the PAN of the assessee. The Ld. AR relied on the following decisions: (i) Alamelu Veerappan V. ITO [2018] 95 taxmann.com 155 (Mad)] (ii) PCIT Vs. Emta Coal Limited, ITAT/226/2022 dated 01.02.2023; (iii) Savita Kapila Vs. ACIT [2020] 118 taxmann.com 46 (Del.); (iv) Sumit Balkrishna Gupta Vs. ACIT [2019] 103 taxmann.com 188 (Bom); (v) Dhirendra Bhupendra Sanghvi Vs. ACIT [2023] 151 taxmann.com 541 (Bom) and (vi) Devendra Vs. Addl. JCIT [2023] 153 taxmann.com520 (Bom) 7. The Ld. AR prayed that the assessment so framed may kindly be quashed. Even on this score the assessment framed is bad in law. 8. Arguing the last limb of his argument, the Ld. AR stated that the assessment is bad in law and as the same is made in a lack of application in mind and also on wrong facts. The Ld. AR stated that there is no whisper in the reason recorded that any assessment has 6 ITA No. 1084/Kol/2023 Debabrata Banerjee, AY 2013-14 been made framed u/s. 143(3) whereas, as a matter of fact, the assessment framed in the instant case u/s. 143(3) vide order dated 10.03.2016 by assessing the income at Rs.2,51,16,536/- by making addition @ 18% of the turnover to the returned income thereby making an addition of Rs.84,14,786/-. The Ld. AR submitted that the reasons have to be recorded as there is no substitution or addition is permissible to reason recorded u/s. 148 in the absent because. The reasons recorded are reproduced as under: “The assessee filed return of income for A.Y. 2013-14 on 31.03.2014 declaring total income of Rs.1,66,75,900/-. The return was processed u/s. 143(1)(a) on 19.08.2014. Information has been received as uploaded on insight portal by the DDIT/ADIT(Inv.),Unit-5, Kolkata Siliguri Development Authority (SJDA) took up the construction of the electric crematorium at Bagdogra and granted work order bearing estimation of the cost, on various dates to M/s Eureka Trader Bureau with Proprietor Sri Ajit Kumar Banerjee of 135 Biplabi Rash Behari Bose Road, Kolkata. A total of 05 work orders were floated by the SJDA, as reported, and issued to M/s Eureka Traders Bureau. It was further reported that Sri Mriganka Mouli Sarkar, the then Executive Engineer, had certified the supply, delivery, installation, testing and commission of the supplied items for electric crematorium at Bagdogra. However, on inspection conducted by the SJDA authorities at the sites of the proposed electric crematorium at Malbazar and Mainaguri, it was detected that neither the materials, except work order no. 601/elect/Engg., has been supplied at both the respective sites nor been kept at the departmental TEA Park Warehouse Near NJP ( which was used as a godown for all supplied materials for different SJDA Projects). The assessee has received a sum of Rs.52,10,74,000/- against these work orders from the SJDA on various dates during the F.Y.2012-13 and it was reported that against such payments no goods were supplied or services were rendered by the assessee. The assessee, on being confronted with the said information, deposed that the payments were made to his proprietorship entity only after the materials supplied/service rendered by him. But he could not provide any documentary evidences viz e-bill, transportation papers, loading & unloading details. etc, to prove that the materials were actually delivered or supplied. In view of the enquiries conducted above, it is seen that the funds which have been received by Sri Ajit Kumar Banerjee, Prop. of M/s Eureka Traders Bureau during the Year 2012-13 amounting to Rs.52,10,74,000/- has been shown as an advance from customer and the part of which was shown as work-in-progress. However, the assessee could not provide any supporting documents regarding supply of goods/services rendered against such payment which infers the misappropriation of his proprietorship firm's account. Necessary verification has been made from the entire details available on records and database on ITD, ITBA and Insight Portal. After analysing the assessment record and relevant information, documents and enquiries made with facts and findings thereof I have "reason to believe" that the income to the extent of more than Rupees One Lakh has escaped assessment in terms of sec.147 of the Income Tax Act, 1961. Hence a proposal for necessary sanction to issue the notice u/s. 148 is put up before Ld. Pr.CIT- 5/Add.ClT, Range-34, Kolkata as per the provisions u/s. 151 of the I.T.Act.” The Ld. AR stated that since the AO was even noted that any assessment has been framed u/s. 143(3) and the issue has been examined by the AO in the original assessment proceeding by calling for necessary documents/evidence from the assessee qua the work done and which was duly furnished before the AO and the AO has examined all these 7 ITA No. 1084/Kol/2023 Debabrata Banerjee, AY 2013-14 evidences and estimated the income of the assessee from the work contract by applying @ 18% over and above the declared income by the assessee thereby making addition of Rs.84,14,786/-. The Ld. AR prayed that in such a scenario, the assessee has to go and in defense of his argument, the Ld. AR relied on the decision of Hindusthan Lever Ltd. (2004) 137 taxmann 479 (Bom) and Tao Publishing Pvt. Ltd. Vs. DCIT [2015] 53 taxmann.com 146 (Bom). The Ld. AR finally prayed that assessment framed by the AO is invalid and non-est in the eyes of law and may kindly be quashed. 9. On the other hand, Ld. DR relied strongly on the orders of the authorities below. The Ld. DR submitted that the assessee has not objected to the issuance of notice u/s. 143(2) during the assessment stage only and participated in the proceeding by furnishing all the details/information and therefore, the case apparently falls within the ambit of section 292BB of the Act which provides that where the assessee has appeared in any proceeding or cooperated in any enquiry relevant to assessment year or reassessment which would be deemed that any notice under any provisions of this Act which are required to be served upon him and which has duly served upon him on time and such assessee shall be precluded from taking any objection in any proceeding or any way in the Act though notice was and served upon him on time or served upon him in any proper manner but nothing contained in this section shall apply where the assessee has raised objection before completion of such assessment or reassessment. The Ld. DR stated that since the assessee has not objected to the issuance of notice by the AO other than one who framed the assessment at this stage assessee is precluded from taking objection of such issuance of notice. The Ld. DR further submitted that though the assessee has been examined in the original assessment proceeding which culminated u/s. 143(3) order dated 20.03.2016 wherein the AO has enquired into the issue from the assessee as well as by calling for information through the contractee by issuing notice u/s. 133(6) of the Act but that would not be compared on reopening the case of the assessee as new material has come in the possession of the AO and to the effect that no execution of work was done by the assessee and, therefore, reopening of assessment was very well within the four corners of law. Further, the Ld. DR contended that admittedly the assessment has been reopened after lapse of four years from the end of the relevant assessment year and it is also true that assessment 8 ITA No. 1084/Kol/2023 Debabrata Banerjee, AY 2013-14 has been framed u/s. 143(3) dated 10.03.2016 by the AO and the reopening could be possible subject to the satisfaction of the condition as enumerated in 1 st proviso to section 147 of the Act. The Ld. DR also stated that the AO has not mentioned such fact in the reason recorded u/s. 148(2) and also not stated therein that escapement is attributable to the assessee truly and correctly disclosed the material facts relating to the income during the assessment proceeding which rendered to the escapement of income but that does not mean that the assessment can be reopened where the said provisions as envisaged by 1 st proviso to section 147. Therefore, even on this score the arguments of the Ld. AR deserve to be brushed aside. On the final argument of the Ld. DR, the Ld. DR submitted that the notice u/s. 148 has been issued in the name of Ajit Kumar Banerjee who expired on 19.12.2019 by mentioning his PAN but in column no. 3 it has been stated that the same was through legal heirs. The Ld. DR, therefore, prayed that it cannot be considered that the notice issued and assessment framed in that manner is in any way renders the notice as well as the issue as nullity in the eyes of law. The Ld. DR, therefore, prayed that the appeal of the assessee may kindly be dismissed. 10. After hearing the rival contentions and perusing the material available on record, we find that the case of the assessee has been reopened u/s. 147 of the Act read with sec. 148 by issuing notice dated 31.03.2021. Admittedly, the assessment has been framed u/s. 143(3) dated 10.03.2016 and the issue which was raised in the reassessment proceeding was also examined and having examined the evidence and the information furnished by the contractee which is a government authority u/s. 133(6) the AO estimated the income by making an addition @ 18% of the turnover over and above the income declared by the assessee. We have perused the reasons recorded by the AO, the copy of which is available at page 1 of the paper book and has extracted above and find that no where the AO has recorded his satisfaction as to how there 3was failure on the part of the assessee to disclose the material information qua income truly and fully which has resulted in the escapement of income. In our opinion, in terms of 1 st proviso to section 147 of the Act, the reopening could not be made after a lapse of four years from the end of relevant assessment year where the assessment has been framed u/s. 143(3) only subject to the satisfaction of condition as enumerated in 1 st proviso to section 147 which has been discussed hereinabove. We note 9 ITA No. 1084/Kol/2023 Debabrata Banerjee, AY 2013-14 that the AO as even referred to the passing of assessment u/s. 143(3), therefore, the reopening has been made in violation of 1 st proviso to section 147 of the Act. Besides, we note that the issue was examined threadbare in the assessment proceeding. Accordingly, the reopening of assessment is bad in law in view of the decision of Hon’ble Apex Court in the case of Ceat Ltd. (supra). Since, we have quashed the reopening of assessment on the basis of non-satisfaction of condition as enumerated in 1 st proviso to section 147 of the Act we are not adjudicating the other alternative submissions made by the assessee during the course of hearing. Consequently, we quash the assessment order and appeal of the assessee is allowed on technical ground. The issue raised on merit and the technical pleas are not adjudicated at this stage and are left open for adjudication if anything arrive at the later stage. 11. In the result, appeal of the assessee is allowed. Order is pronounced in the open court on 18 th June, 2024. Sd/- Sd/- (Pradip Kumar Choubey) (Rajesh Kumar) Judicial Member Accountant Member Dated: 18th June, 2024 JD, Sr. PS Copy of the order forwarded to: 1. Appellant– 2. Respondent . 3. CIT(A), NFAC, Delhi 4. CIT, 5. DR, ITAT, Kolkata, True Copy By Order Assistant Registrar ITAT, Kolkata Bench, Kolkata